The Failure of Global Cooperation and the Future of Governance in a Time of Crisis

Rohinton Medhora discusses the global pandemic as a low-probability, high-impact event that has revealed mixed national responses and, more disappointingly, a significant failure of global cooperation. Unlike previous crises, the current environment is marked by increased protectionism in medical supplies and a lack of concerted macroeconomic responses. He stresses the urgent need for proactive planning for global vaccine distribution, advocating for reforms to intellectual property regimes like TRIPS, suggesting compulsory licensing or advanced market commitments to ensure rapid and equitable access worldwide, drawing parallels to the challenges of disseminating green technology.

Medhora explores the long-term implications of the crisis, including the potential for fiscal and economic exhaustion. He expresses hope that the pandemic might alleviate skepticism towards science and expert advice, reinforcing community values, but remains concerned about the sustainability of public vigilance over an extended period. While acknowledging the analogy to war-time spending, he highlights the unique challenge of fighting a non-human "alien" enemy. A major geopolitical concern is the escalating schism between the United States and China, which he argues must find a way to cooperate on critical global challenges like pandemics and climate change, given their intertwined economic and geopolitical roles.

The discussion delves into the evolving architecture of global governance, the resilience of supply chains, and the role of the nation-state in a globalized society. Medhora, referencing Andy Haldane's insights, suggests a re-evaluation of traditional economic integration models, advocating for a biological concept of "compartmentalization" to contain "bads" like disease, a perspective often overlooked in the pursuit of pure efficiency. He notes a significant deterioration of public trust in governance, particularly in the US post-2008, which complicates collective action. The US's recent tendency to alienate allies and pursue unilateral actions is viewed with regret from Canada, underscoring the shared fate and the imperative for a strong, stable US.

Finally, Medhora advocates for a fundamental rethinking of fiscal policy, the role of central banks, and the distinction between government "expenditures" and "investments." He argues that in a low-interest-rate environment, spending on public goods such as early childhood education (citing Jim Heckman's work) or national healthcare should be viewed as crucial investments with high future returns. He addresses the disproportionate burden on developing countries, particularly in Africa and India, calling for a "Marshall Plan" equivalent. He suggests China could play a leading role by forgiving African debt or spearheading vaccine distribution. He also highlights the unique development challenges for African nations, as advancements in AI and robotics diminish traditional manufacturing entry points, necessitating investment in human capital and resilient societal systems, with Europe having a significant interest in Africa's stability to prevent migration surges.

"what we're seeing happening is a very low probability event that has huge impacts and as societies and as polities no matter what your orientation no matter what kind of political system you work or live under we all have difficulty truly planning for something that is very low probability but high impact"

"the bit that is the most disappointing and if you compare with the sars epidemic or 911 or the financial crisis all of which were of course a magnitude smaller than what we're facing now is the world was a different place then and global cooperation however imperfect still meant something this time we've seen it doesn't seem to be working almost at any level"

"we still have a very proprietary based intellectual property regime whose job is to slow down actually the spread of ip in an instance where you you want the exact opposite to be happening"

"if we don't wipe it out and there are these important pockets that remain because the vaccine was not affordable or just didn't get there or whatever we will all continue to pay the price for years to come"

"some of the skepticism that we had around science and expert advice I hope is being alleviated during this crisis in which even people who are otherwise skeptical of these things understand why public action matters why it has to be evidence-based and how technology can be harnessed for the good"

"I'm deeply troubled by the schism between the US and China I think one of the geopolitical things orientations that we should look out for is how these two countries and western europe come out five or ten years down the road whether this ushers in an era in which we value cooperation we don't have to love each other to cooperate with each other or whether this leads to fracture"

"in economics and finance everybody acts like removing all obstacles to integration in every dimension and every direction promotes efficiency he said in biology there's another notion of compartmentalization to stop disease from propagating he said so you want the goods to be freed but you want the bads to be contained and economics never talks about the bats"

"this crisis as other such instances do should change the way we consider what an investment is and what an expenditure is and for too long again we the last two or three decades we've we've fallen into this trap of government expenditures being expenditures expenditures on public goods being expenditures when in fact they're they're almost like savings their investment in future productive capacity"

"if you're ethiopia you simply cannot specialize in low end manufacturers and then move up the value chain and call that process development because the lower ends of the value chain are becoming robotized"

"Europe has the most by the way to lose if Africa as a continent collapse is simply because of the surge of migration and and and other ills that would flow north as it were"